Austria’s tobacco tax revenues reach €2.1 billion by 2023, but stagnant tax receipts call for future reforms. Traditional tobacco market share has declined while alternatives such as heated tobacco products have risen, accounting for 7% of the market and continuing to grow. Seventy-six percent of the price of each packet of cigarettes is given to the state, with an average price of 5.77 euros, which is more expensive than in neighboring countries.

According to Austrian media vienna news, Japan Tobacco International Austria (JTI Austria) issued a newsletter that the Austrian Ministry of Finance in 2023 from tobacco tax revenue of about 2.1 billion euros, including value-added tax for 2.7 billion euros. Tax revenues have stagnated at the same level as in the previous two years, despite the fact that tobacco prices have risen by about 30 euro cents per pack in the last year.

According to JTI Austria member Ralf Wolfgang Lothert, the fact that tax revenues have remained at a stable level despite the rapid rise in tobacco price tags shows the need for reform in the coming years.

The market share of traditional tobacco is declining, however new types of tobacco, such as heated tobacco products, are on the rise, with a current market share of around 7% and still rising. Tobacco-free alternatives such as nicotine pockets or e-cigarettes have a relatively small market share in Austria. These alternatives are taxed less heavily than traditional tobacco, resulting in tax losses of tens of millions of euros per year.

According to JTI, the traditional tobacco market has remained stable over the past year, with 12.6 billion cigarettes sold for the year, including some that are not taxed in Austria. According to Ross Hennessy, president of JTI Austria, this reflects a “moderate volume decline” compared to 2022, with tobacco becoming more expensive for consumers. The average selling price rose from €5.502 to €5.77.

However, with annual sales of €3.8 billion, the average earnings of tobacco stores increased. In addition, the commercial profit margin rose by 8.2% to €191,000.

Tobacco entering through smuggling accounted for 11.6% in the past year. Since a part of the tobacco is not taxed in Austria, the tax loss in 2023 is roughly EUR 285 million. For producers and traders, the loss is about €91 million.

Of the price of a pack of cigarettes in Austria, 76% is given to the state as tobacco tax and the rest will be divided among producers, wholesalers and tobacconists. The average price of €5.77 per pack makes tobacco in Austria more expensive than in neighboring Slovakia and Slovenia (€4.60 each), Hungary (€5.57), and Italy (€5.20). Tobacco is more expensive in Germany (7.00 euros), Switzerland (8.71 euros) and the Czech Republic (5.84 euros).

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